1. Field of Invention
Method and apparatus for facilitating verifiably correct auctions.
2. Discussion of Related Art
In recent years, auctions and electronic marketplaces have been used to facilitate trillions of dollars in trade in the world economy. Individual events, for instance, the procurement of truckload services by Proctor and Gamble, approach $1 billion in transaction value. The eBay marketplace reported a record $44.3 billion volume in the 2005 calendar year, representing a 30% increase over 2004. Governments world-wide use auctions to allocate property rights, including high profile auctions for wireless spectrum and licenses for new cars. Previously used for rare goods, or for time-sensitive goods (e.g., flowers, fish), auctions can now be harnessed for all kinds of commercial transactions. In a typical week in February, 2006, the U.S. treasury sells more than $25 billion in three-month treasury bills. Most recently sponsored search auctions have driven upwards of $1 billion in revenue to Google in a single quarter.
Despite this success, there is increasing evidence that fraud is an issue that can plague electronic auctions. Indeed, a number of authors have argued that the reason that theoretically appealing auctions such as Vickrey auctions are rare in practice is because of the problem of fraud and untrustworthy auctioneers. Two kinds of manipulations come to mind. The first is an auctioneer that deviates from the rules of an auction. This problem can be alleviated at a cost in privacy by the public revelation, and verification of all bids. Another, more subtle and harder to prevent problem can occur when an auctioneer is in collusion with some bidders, perhaps conveying useful information about bids received during the bidding process. Other fraud possibilities that arise in electronic auctions include refusal of the auctioneer to accept bids into the auction and refusal by bidders to reveal bids after the bid submission deadline.